Lira crashes as U.S. slaps tariffs on Turkey

Lira crashes as U.S. slaps tariffs on Turkey

Lira crashes as U.S. slaps tariffs on Turkey

Turkey's Trade Ministry on Friday said additional steel and aluminum tariffs announced by U.S. President Donald Trump were against the rules of the World Trade Organization (WTO).

Trump said the tariffs on aluminum imports would be increased to 20 percent and those on steel to 50 percent as the Turkish Lira "slides rapidly downward against our very strong Dollar!"

Trump's move reflects a confluence of factors that have led to worsening relations between the White House and Turkish President Recep Tayyip Erdogan, and his willingness to ratchet up economic pain on Turkey could lead to a much bigger clash.

One of the triggers of the turmoil has been a standoff with the US over a detained American pastor that Turkey, a North Atlantic Treaty Organisation ally, has put on trial for espionage and terror-related charges linked to a failed coup attempt in the country two years ago.

Turkey is also frustrated at USA unwillingness to extradite Turkish cleric Fetullah Gulen, who Erdogan accuses of staging a failed 2016 coup attempt.

And the U.S. Air Force has used Incirlik Air Base in southern Turkey for years, even though a number of people in Turkey have pressed to have the U.S. forces expelled.

"Nevertheless, we implore President Trump to return to the negotiating table - this can and should be resolved through dialogue and cooperation".

Trump and Secretary of State Mike Pompeo have repeatedly called for his release, while Erdogan has said the USA should respect Turkey's judicial process.

Turkey is facing a deepening economic crisis, as the lira fell sharply in early morning trading today (August 10) and the yields on government debt rose further.




"Turkey expects other member countries to abide by worldwide rules", the ministry said in a statement, adding that it would support steel and aluminum exporters on all global platforms. "Threats, sanctions and bullying against Turkey will not work", he said.

As with the financial crisis set off by Greece in 2010, Friday's events were the latest example of how troubles in a nation with a midsize economy but world-class problems could threaten financial stability further afield. "Relations with countries who behave like this have reached a point beyond salvaging", said Erdogan, who warned of "economic war".

Turkey exported about 500,000 tons to the U.S.in the five months to May, compared with more than 1 million tons in the same period past year, according to data from the U.S. Census bureau.

His comments on interest rates - and his recent appointment of his son-in-law as finance minister - have heightened perceptions that the central bank is not independent.

"This is a national, domestic battle".

Erdogan said during an address to supporters: "Change the euros, the dollars and the gold that you are keeping beneath your pillows into lira at our banks". This will be my people's response to those who have waged an economic war against us'.

"One of our principles will be ensuring the full independence of monetary policy", Abayrak said as he outlined his ministry's "new economic model".

The lira hit a record low of 6.24 per dollar on Friday, before recovering to 5.92 - still down a whopping 7 per cent on the day.

While there was no statement from the Turkish side, US State Department spokesperson Heather Nauert said wide-ranging conversations had been held. As the lira falls in value, the debt becomes harder to pay. Turkey is the sixth-largest steel exporter to the United States.

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